The term “ETF” is used by many investors to refer to a wide range of financial structures that aren’t technically 1940 Act Exchange-Traded Funds. Many of the most popular ETFs included in our Free ETF Screener are technically Unit Investment Trusts (UITs), a type of security that functions in largely the same way as an ETF but features some structural nuances that impact the risk/return profile. [Download How to Pick The Right ETF Every Time]. Dividends One primary difference between a straight ETF and an exchange-traded-UIT—such as the S&P 500 SPDR —is how dividends are handled. When a UIT receives a dividend from a component company, the fund managers will hold it in cash until the end of the quarter. Come the end of the quarter, collected dividends are paid out to investors holding units of the fund. ETFs that are not set up as UITs—such as the iShares S&P 500 Index [...] Click here to read the original article on ETFdb.com. Related Posts: Breaking Down The S&P 500 ETF Price War VelocityShares Fills Pipeline First Trust Debuts “Tail Hedge” S&P 500 ETF (VIXH) ETF Pop Quiz: Emerging Markets, Junk Bonds, And Spain The Most Successful ETFs Of All-Time

The term “ETF” is used by many investors to refer to a wide range of financial structures that aren’t technically 1940 Act Exchange-Traded Funds. Many of the most popular ETFs included in our Free ETF Screener are technically Unit Investment Trusts (UITs), a type of security that functions in largely the same way as an ETF but features some structural nuances that impact the risk/return profile. [Download How to Pick The Right ETF Every Time]. Dividends One primary difference between a straight ETF and an exchange-traded-UIT—such as the S&P 500 SPDR —is how dividends are handled. When a UIT receives a dividend from a component company, the fund managers will hold it in cash until the end of the quarter. Come the end of the quarter, collected dividends are paid out to investors holding units of the fund. ETFs that are not set up as UITs—such as the iShares S&P 500 Index [...]